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October 16, 2018

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The New Era of Loans- Crypto Cash Advances

It won’t be too long before we stop seeing cash loan businesses on almost every city street corner and we start seeing crypto-based loan businesses in their place. We do already have crypto-based loan businesses like SALT, but this idea of cash advances that are facilitated with crypto is quite new. Even so, one particular former Goldman Sachs executive seems to be onboard. 


According to an announcement on Medium by the startup called HOLD on May 2nd, Priyanka Lilaramani has recently been hired as their CEO. Lilaramani was an Executive Director at Goldman Sachs from 2001-2012, and then went on to be a leader at several non-Crypto startups before moving into the Crypto-space, this year. 


Why did someone with such a large background in traditional finance join a crypto firm? The most striking thing about HOLD is what their mission is. HOLD wants to be the cash-advance center of the crypto-sphere. This means that if they are successful and their business model truly takes hold, then traditional cash advance firms could theoretically start to become obsolete.


On top of this, if they are successful, we might just start to see more governance and therefore fairness in the cash advance space, which is now an industry that’s ripe with arguably dishonest rates related to loans and compounding interest. 


If all information related to such loans was on the Blockchain, then there would be little grey areas to dispute. Everyone would know the original terms and third parties could weigh in whenever an argument arose. 


In addition to these possible, positive implications that could come from HOLD’s success, there’s also the fact that the firm has made it clear that it will not require traditional credit checks. If this turns out to be 100% true, then a key advantage as well as a key disadvantage logically follow. 


Firstly, the key advantage is that all transactions will be done in crypto and users will be able to collateralize up to 65% of the crypto that they own in exchange for cash, according to HOLD and CoinTelegraph. That’s also the key disadvantage.


The Crypto market is still quite possibly the most volatile financial market that we’ve ever seen in history. Unless users are well-schooled in trading and know when to get in at the low and get out at the high, for example, HOLD’s services could be said to be quite risky.


In addition to HOLD keeping a percentage of the user’s crypto as collateral for the duration of the loan, HOLD also reportedly requires that anyone who wants to use its services keeps HOLD’s dedicated token locked in his or her wallet for at least 6 months. If this is isn’t done, then you simply cannot request a loan.


This tactic is tried and true already in the industry as it incentivizes users to get in and stay in the network, for the long-term. Another group that’s incentivized is the lenders themselves. If you’ve been assuming up to this point that the lender was HOLD, then you’d be off-base.


HOLD will facilitate the process but will be decentralized. Lenders will be anyone who has the funds to do so and meets whatever HOLD’s identity requirements for users turn out to be. 


According to HOLD, once a lender is approved and starts lending fiat on the platform, then he or she can reasonably hope to earn 4.5-7.5 percent interest per annum. Thus, this serves as a semi-similar income stream to Masternodes


All in all, like many of the other projects that we’ve discussed HOLD is promising but it hasn’t gotten off the ground yet.  It’s also worth mentioning that HOLD appears to have an office in Malta. Is a future partnership with Binance in the future? When HOLD takes off and this starts to become clearer, its lending practices might bear close following as an example for others who are looking to follow HOLD in this area. 




By: BGN Editorial Staff

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